Office of Inspector General—Office of Audit 

OFFICE OF WORKERS’

COMPENSATION PROGRAMS

SPECIAL REPORT RELATING TO THE

FEDERAL EMPLOYEES’ COMPENSATION ACT

SPECIAL BENEFIT FUND

September 30, 2010 

 

 

Date Issued: October 29, 2010 

 Report Number: 22-11-001-04-431

This report was prepared by KPMG LLP, under contract to the U.S. 

Department of Labor, Office of Inspector General, and by acceptance, it 

becomes a report of the Office of Inspector General. 

 __________________________ 

Assistant Inspector General for Audit 

U.S. Department of Labor 

Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 1

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431

Table of Contents 

Assistant Inspector General for Audit’s Memorandum........................... .......................... 3

1. A. Independent Auditors' Report on the Schedule of Actuarial Liability, Net 

 Intra-Governmental Accounts Receivable and Benefit Expense ........................ 5

B. Schedule of Actuarial Liability, Net Intra-Governmental Accounts 

 Receivable and Benefit Expense ......................................................................... 11

C. Notes to the Schedule of Actuarial Liability, Net Intra-Governmental 

 Accounts Receivable and Benefit Expense ........................................................ 13

2. A. Independent Accountants' Report on Applying Agreed-Upon 

 Procedures ............................................................................................................. 17

 B. Schedules 

 Schedule of Actuarial Liability by Agency ......................................................... 19

 Schedule of Net Intra-Governmental Accounts Receivable by Agency .......... 21

 Schedule of Benefit Expense by Agency ........................................................... 23

 C. Agreed-Upon Procedures and Results 

 

 Actuarial Liability ................................................................................................. 25

 Net Intra-Governmental Accounts Receivable .................................................. 33

 Benefit Expense ................................................................................................... 40

Appendix 

 Acronyms and Abbreviations ............................................................................. 45 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

 Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

 Report Number: 22-11-001-04-431

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Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431

3

U.S. Department of Labor Office of Inspector General

 Washington, DC 20210 

Assistant Inspector General for Audit’s Memorandum

MEMORANDUM FOR: FEDERAL AGENCIES WITH RESPONSIBILITIES 

 FOR THE FEDERAL EMPLOYEES’ COMPENSATION 

ACT PROGRAM 

 

FROM: ELLIOT P. LEWIS 

 Assistant Inspector General for Audit 

SUBJECT: Special Report Relating to the Federal Employees’ 

Compensation Act Special Benefit Fund – FY 2010 

 Report No. 22-11-001-04-431 

Attached is the special report on the Federal Employees’ Compensation Act (FECA) 

Special Benefit Fund (the Fund) that was prepared to assist in the audit of your 

agency’s annual financial statements. The U.S. Department of Labor, Office of 

Workers’ Compensation Programs (OWCP), administers the Fund and the DOL Office 

of Inspector General (OIG) is responsible for auditing the Fund. 

The OIG contracted with the independent certified public accounting firm of KPMG LLP 

(KPMG) to prepare the report on the Fund as of and for the year ended 

September 30, 2010. This special report consists of two reports. The first report is an 

opinion on the Schedule of Actuarial Liability, Net Intra-Governmental Accounts 

Receivable, and Benefit Expense of the Fund (the Schedule) as of and for the year 

ended September 30, 2010. KPMG issued an unqualified opinion on the Schedule. In 

connection with this audit, KPMG performed certain tests of controls and compliance 

with laws and regulations related to the Fund. Their testing disclosed a significant 

deficiency in internal control over financial reporting titled “Controls Over the Financial 

Reporting Process Need Improvement.” This significant deficiency is not considered to 

be a material weakness. Their testing of compliance disclosed no instances of 

noncompliance or other matters that are required to be reported under generally 

accepted government auditing standards. 

The second report is an agreed-upon procedures (AUP) report on the Schedules of 

Actuarial Liability, Net Intra-Governmental Accounts Receivable, and Benefit Expense 

of the Fund by agency as of and for the year ended September 30, 2010. This report 

includes a description of the procedures performed and the results of those procedures.
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

 Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

 Report Number: 22-11-001-04-431

4

The sufficiency of the procedures referred to in the AUP is solely the responsibility of 

the parties specified in this report. Consequently, neither the OIG nor KPMG makes 

any representations regarding the sufficiency of the procedures. Because the AUP 

performed did not constitute an audit, the auditor did not express an opinion on any 

elements, accounts, or items as they pertained to the AUP report. Further, neither the 

OIG nor KPMG has any obligation to perform any procedures beyond those listed in the 

attached report. 

KPMG is responsible for the attached reports dated October 29, 2010, and the 

conclusions expressed in the reports. We reviewed KPMG’s reports and related 

documentation and inquired of their representatives. Our review, as differentiated from 

an audit in accordance with generally accepted government auditing standards, was not 

intended to enable us to express, and we do not express opinions on: the actuarial 

liability, net intra-governmental accounts receivable, and benefit expense of the Fund in 

total as of and for the year ended September 30, 2010; or the AUP report on the 

schedules of actuarial liability, net intra-governmental accounts receivable and benefit 

expense of the Fund by agency as of and for the year ended September 30, 2010. Our 

review disclosed no instances where KPMG did not comply, in all material respects, 

with generally accepted government auditing standards. 

If you have any questions or comments, please send your questions or comments via 

regular mail, facsimile, or e-mail to: 

 Joseph L. Donovan, Jr. 

 Audit Director, Financial Statement Audits 

 U.S. Department of Labor 

 Office of Inspector General 

 200 Constitution Ave., N.W., Room S-5512 

 Washington, D.C. 20210 

 Fax: (202) 693-5169 

 E-mail: donovan.joseph@oig.dol.gov 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

5

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036-3389 

SECTION 1A 

Independent Auditors’ Report on the 

Schedule of Actuarial Liability, Net Intra-Governmental 

Accounts Receivable, and Benefit Expense

Shelby Hallmark, Director 

Office of Workers’ Compensation Programs, U.S. Department of Labor 

Government Accountability Office, Office of Management and Budget, 

and Agencies Specified in Section 2B of this Report: 

We have audited the accompanying Schedule of Actuarial Liability and Net IntraGovernmental Accounts Receivable as of September 30, 2010, and Benefit Expense for 

the year ended September 30, 2010, of the U.S. Department of Labor’s (DOL) Federal 

Employees’ Compensation Act Special Benefit Fund (the Schedule). The objective of 

our audit was to express an opinion on the fair presentation of DOL’s Schedule. In 

connection with our audit, we also considered DOL’s internal control over financial 

reporting related to the Schedule and tested DOL’s compliance with certain provisions 

of applicable laws and regulations that could have a direct and material effect on the 

Schedule. 

SUMMARY 

As stated in our Opinion On The Schedule section of this report, we concluded that 

DOL’s Schedule as of and for the year ended September 30, 2010, is presented fairly, 

in all material respects, in conformity with U.S. generally accepted accounting 

principles. 

Our consideration of internal control over financial reporting resulted in the identification 

of a deficiency that we consider to be a significant deficiency, as defined in the Internal 

Control Over Financial Reporting section of this report, related to weaknesses in internal 

control over financial reporting. We did not identify any deficiencies in internal control 

over financial reporting that we consider to be material weaknesses as defined in the 

Internal Control Over Financial Reporting section of this report. 

The results of our tests of compliance with certain provisions of laws and regulations 

disclosed no instances of noncompliance or other matters that are required to be 

reported herein under Government Auditing Standards. 

KPMG LLP is a Delaware limited liability partnership, 

the U.S. member firm of KPMG International Cooperative 

(“KPMG International”), a Swiss entity. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

6

The following sections discuss our opinion on DOL’s Schedule, our consideration of 

DOL’s internal control over financial reporting, our tests of DOL’s compliance with 

certain provisions of applicable laws and regulations, and management’s and our 

responsibilities. 

OPINION ON THE SCHEDULE 

We have audited the accompanying Schedule of Actuarial Liability and Net IntraGovernmental Accounts Receivable as of September 30, 2010, and Benefit Expense for 

the year ended September 30, 2010, of the U.S. Department of Labor’s Federal 

Employees’ Compensation Act Special Benefit Fund. 

In our opinion, the Schedule referred to above presents fairly, in all material respects, 

the actuarial liability and net intra-governmental accounts receivable as of September 

30, 2010, and benefit expense for the year ended September 30, 2010, in conformity 

with U.S. generally accepted accounting principles. 

INTERNAL CONTROL OVER FINANCIAL REPORTING 

A deficiency in internal control exists when the design or operation of a control does not 

allow management or employees, in the normal course of performing their assigned 

functions, to prevent, or detect and correct misstatements on a timely basis. A material 

weakness is a deficiency, or a combination of deficiencies, in internal control such that 

there is a reasonable possibility that a material misstatement of DOL’s Schedule will not 

be prevented, or detected and corrected on a timely basis. 

Our consideration of internal control over financial reporting was for the limited purpose 

described in the Responsibilities section of this report and was not designed to identify 

all deficiencies in internal control over financial reporting that might be deficiencies, 

significant deficiencies, or material weaknesses. In our audit, we did not identify any 

deficiencies in internal control over financial reporting that we consider to be material 

weaknesses, as defined above. However, we identified a deficiency in internal control 

over financial reporting that is described in Exhibit I that we consider to be a significant 

deficiency in internal control over financial reporting. A significant deficiency is a 

deficiency, or a combination of deficiencies, in internal control that is less severe than a 

material weakness, yet important enough to merit attention by those charged with 

governance. Exhibit I also provides the status of the prior year significant deficiency. 

COMPLIANCE AND OTHER MATTERS 

The results of our tests of compliance as described in the Responsibilities section of this 

report disclosed no instances of noncompliance or other matters that are required to be 

reported herein under Government Auditing Standards. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

7

RESPONSIBILITIES

Management’s Responsibilities. Management is responsible for the Schedule; 

establishing and maintaining effective internal control; and complying with laws and 

regulations applicable to the Schedule. 

Auditors’ Responsibilities. Our responsibility is to express an opinion on the Schedule 

based on our audit. We conducted our audit in accordance with auditing standards 

generally accepted in the United States of America and the standards applicable to 

financial audits contained in Government Auditing Standards, issued by the Comptroller 

General of the United States. Those standards require that we plan and perform the 

audit to obtain reasonable assurance about whether the Schedule is free of material 

misstatement. An audit includes consideration of internal control over financial reporting 

as a basis for designing audit procedures that are appropriate in the circumstances, but 

not for the purpose of expressing an opinion on the effectiveness of DOL’s internal 

control over financial reporting. Accordingly, we express no such opinion. 

An audit also includes: 

 Examining, on a test basis, evidence supporting the amounts and disclosures in 

the Schedule; 

 Assessing the accounting principles used and significant estimates made by 

management; and 

 Evaluating the overall Schedule presentation. 

We believe that our audit provides a reasonable basis for our opinion. 

In planning and performing our audit, we considered DOL’s internal control over 

financial reporting by obtaining an understanding of DOL’s internal control, determining 

whether internal controls had been placed in operation, assessing control risk, and 

performing tests of controls as a basis for designing our auditing procedures for the 

purpose of expressing our opinion on the Schedule, but not for the purpose of 

expressing an opinion on the effectiveness of DOL’s internal control over financial 

reporting. Accordingly, we do not express an opinion on the effectiveness of DOL’s 

internal control over financial reporting. 

As part of obtaining reasonable assurance about whether the Schedule is free of 

material misstatement, we performed tests of DOL’s compliance with certain provisions 

of laws and regulations, noncompliance with which could have a direct and material 

effect on the determination of Schedule amounts. We limited our tests of compliance to 

the provisions described in the preceding sentence, and we did not test compliance with 

all laws and regulations applicable to the DOL Schedule. However, providing an opinion 

on compliance with laws and regulations was not an objective of our audit and, 

accordingly, we do not express such an opinion. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

8

DOL’s response to the finding identified in our audit is presented in Exhibit I. We did not 

audit DOL’s response and, accordingly, we express no opinion on it. 

This report is intended solely for the information and use of the U.S. Department of 

Labor, the U.S. Government Accountability Office, Office of Management and Budget, 

the U.S. Congress, and those Federal agencies with responsibility for the FECA 

program and is not intended to be and should not be used by anyone other than these 

specified parties. 

October 29, 2010
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

9

Exhibit I 

Controls Over the Financial Reporting Process Need Improvement 

During our FY 2008 and FY 2009 audits, we noted deficiencies in the internal control 

over financial reporting related to the preparation of the FECA Schedule of Actuarial 

Liability, Net Intra-Governmental Accounts Receivable, and Benefit Expense (the 

Schedule) as prepared by the Employment Standards Administration, Office of 

Management, Administration and Planning (ESA/OMAP) that resulted in a number of 

errors in the draft Schedule that were later corrected by management. 

We recommended that ESA/OMAP management establish and implement written 

policies and procedures that would provide those responsible for preparing and 

reviewing the Schedule with detailed guidance to facilitate the preparation and review of 

the Schedule and mitigate the risk of misstatements in the future. Furthermore, the 

policies and procedures should include comparing the balances reported in the 

Schedule to the DOL general ledger and information posted on the DOL website. We 

also recommended that policies and procedures be established and implemented to 

prepare and review the Schedule quarterly instead of just at fiscal year end to help 

ensure that the Schedule is prepared accurately and timely at fiscal year end in the 

future. 

During our FY 2010 audit, we noted that the Office of Workers’ Compensation Programs 

(OWCP) management had not established formalized policies and procedures that 

would provide those responsible for preparing and reviewing the Schedule with detailed 

guidance to facilitate the timely preparation and review of the Schedule and mitigate the 

risk of misstatements in the future. We also noted that OWCP had not established and 

implemented policies and procedures to prepare and review the Schedule quarterly 

instead of just at fiscal year end to help ensure that the Schedule is prepared accurately 

and timely at fiscal year end. 

 

Per GAO’s Standards of Internal Control in the Federal Government, “Internal control 

should generally be designed to assure that ongoing monitoring occurs in the course of 

normal operations. It is performed continually and is ingrained in the agency’s 

operations. It includes regular management and supervisory activities, comparisons, 

reconciliations, and other actions people take in performing their duties.” 

GAO’s Standards of Internal Control in the Federal Government also states, 

“Transactions should be promptly recorded to maintain their relevance and value to 

management in controlling operations and making decisions. This applies to the entire 

process or life cycle of a transaction or event from the initiation and authorization 

through its final classification in summary records. In addition, control activities help to 

ensure that all transactions are completely and accurately recorded.” 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

10 

OMB Circular No. A-123, Management’s Responsibility for Internal Control, states that 

“The agency head must establish controls that reasonably ensure that obligations and 

costs are in compliance with applicable laws; funds, property, and other assets are 

safeguarded against waste, loss, unauthorized use, or misappropriation; and revenues 

and expenditures applicable to agency operations are properly recorded and accounted 

for to permit the preparation of accounts and reliable financial and statistical reports . . .” 

During the prior fiscal year, OWCP was a component of the ESA, which was the agency 

within the Department of Labor (DOL) responsible for both preparing the FECA 

Schedule and providing the information to the CFO Act agencies and other specified 

agencies to support and facilitate the preparation of their respective financial 

statements. Effective November 8, 2009, the ESA was abolished and OWCP now 

reports directly to the Office of the Secretary of Labor. OWCP’s accounting staff was 

also reduced from 5 to 2 professionals during the reorganization. In January 2010, DOL 

implemented the New Core Financial Management System (NCFMS) to replace its 

legacy accounting and reporting system, the Department of Labor Accounting and 

Related Systems (DOLAR$). The implementation of NCFMS required significant 

involvement of OWCP’s accounting staff. These staffing reductions and the increase in 

demands on the remaining staff prevented OWCP from being able to dedicate sufficient 

resources to implement our prior year recommendation. 

Management’s Response: 

Management agreed to formalize written policies and procedures for preparation and 

review of the schedules, and stated that this action will be completed during the second 

quarter of FY 2011. Management also stated that quarterly trial schedules will be 

prepared for each of the first three quarters of FY 2011 once the procedures are 

formally established. 

Auditors’ Conclusion: 

The prior-year recommendation remains resolved and open. To close the 

recommendation, OWCP needs to provide documentation that the written policies and 

procedures for preparation of the schedules have been developed and implemented, 

and quarterly trial schedules have been prepared. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

11

SECTION 1B 

U.S. Department of Labor 

Office of Workers’ Compensation Programs 

Federal Employees’ Compensation Act Special Benefit Fund 

Schedule of Actuarial Liability and Net Intra-Governmental 

Accounts Receivable as of September 30, 2010, and Benefit Expense

For the Year Ended September 30, 2010 

(dollars in thousands)

Actuarial Liability $ 29,819,932

Net Intra-Governmental Accounts Receivable $ 5,133,835

Benefit Expense $ 5,674,807

See accompanying notes to the Schedule.
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

 Report Number: 22-11-001-04-431 

12 

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Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

13

SECTION 1C 

Notes to the Schedule of Actuarial Liability and Net Intra-Governmental 

Accounts Receivable as of September 30, 2010, and Benefit Expense

For the Year Ended September 30, 2010 

1. Significant Accounting Policies

 a. Basis of Presentation 

The Schedule of Actuarial Liability and Net Intra-Governmental Accounts 

Receivable as of September 30, 2010, and Benefit Expense for the year ended 

September 30, 2010, of the U.S. Department of Labor’s Federal Employees’ 

Compensation Act Special Benefit Fund (the Schedule) has been prepared to 

report the actuarial liability, net intra-governmental accounts receivable, and 

benefit expense of the U.S. Department of Labor’s (DOL) Federal Employees' 

Compensation Act (FECA) Special Benefit Fund (the Special Benefit Fund). The 

Special Benefit Fund was established by the Federal Employees' Compensation 

Act to provide for the financial needs resulting from compensation and medical 

benefits authorized under the Act. The DOL, Office of Workers’ Compensation 

Programs (OWCP) is charged with the responsibility of operating the Special 

Benefit Fund under the provisions of the Act. The Schedule has been prepared 

from the accounting records of the Special Benefit Fund. The actuarial liability, 

net intra-governmental accounts receivable, and benefit expense of the Special 

Benefit Fund are considered specified accounts for the purpose of this Schedule. 

OWCP is responsible for providing this information to the CFO Act agencies and 

other specified agencies to support and prepare their respective financial 

statements. Effective November 8, 2009, the ESA was abolished and OWCP 

reports directly to the Office of the Secretary of Labor. 

The actuarial liability of $29,819,932 thousand is an accrued estimate of future 

workers' compensation benefits as of September 30, 2010. Historical benefits 

paid, inflation and interest rate assumptions, and other economic factors are 

applied to the actuarial model that calculates the liability estimate. The net intragovernmental accounts receivable is the amount due from Federal agencies for 

benefit payments paid to or on behalf of employees of the employing agency as 

of September 30, 2010. The net intra-governmental accounts receivable includes 

amounts which were billed to the employing agencies through June 30, 2010, but 

not paid as of September 30, 2010, including prior years, if applicable, plus the 

accrued receivable for benefit payments not yet billed for the period of July 1, 

2010, through September 30, 2010, less credits due from the public. Benefit 

 (continued) 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

14 

SECTION 1C 

Notes to the Schedule of Actuarial Liability and Net Intra-Governmental 

Accounts Receivable as of September 30, 2010, and Benefit Expense

For the Year Ended September 30, 2010 

expense consist of benefits paid and accrued for the period from October 1, 

2009, to September 30, 2010, plus the net change in the actuarial liability for the 

fiscal year. 

Benefit payments are intended to provide income and medical cost protection to 

covered Federal civilian employees injured on the job, employees who have 

incurred a work-related occupational disease, and beneficiaries of employees 

whose death is attributable to job-related injury or occupational disease. 

b. Basis of Accounting 

The Schedule has been prepared on the accrual basis of accounting in 

conformity with U.S. generally accepted accounting principles. 

An estimate of claims that have been incurred but not reported are included in 

the actuarial liability. Therefore, the actuarial liability represents the estimated 

present value of future compensation and medical payments based upon 

approved claims, plus a component for incurred but not reported claims. 

2. Actuarial Liability (Future Workers’ Compensation Benefits)

The Special Benefit Fund was established under the authority of the Federal 

Employees' Compensation Act to provide income and medical cost protection to 

covered Federal civilian employees injured on the job, employees who have 

incurred a work-related occupational disease, and beneficiaries of employees 

whose death is attributable to a job-related injury or occupational disease. The 

fund is reimbursed by other Federal agencies for the FECA benefit payments 

made on behalf of their workers. 

The actuarial liability for future workers’ compensation reported on the Schedule 

includes the expected liability for death, disability, medical and miscellaneous 

costs for approved cases as well as an estimate for those cases incurred but not 

reported. The liability is determined using a method that utilizes historical benefit 

payment patterns related to a specific incurred period to predict the ultimate 

payments related to that period. The actuarial model uses a Paid Loss 

Development Method by agency, by defined agency groups, and in total using 

inflation rate assumptions on both past and future indemnity and medical benefits 

to adjust past data and project forward. 

(continued) 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

15

SECTION 1C 

Notes to the Schedule of Actuarial Liability and Net Intra-Governmental 

Accounts Receivable as of September 30, 2010, and Benefit Expense

For the Year Ended September 30, 2010 

Consistent with past practice and as allowed under U.S. generally accepted 

accounting principles, these projected annual benefit payments have been 

discounted to present value using the Office of Management and Budget's (OMB) 

economic assumptions for 10-year Treasury notes and bonds. The interest rate 

assumptions utilized for discounting was 3.65% in year 1 and 4.30% in 

subsequent years. 

To provide more specifically for the effects of inflation on the liability for future 

workers' compensation benefits, wage inflation factors (cost of living allowance or 

COLA), and medical inflation factors (consumer price index-medical or CPI-Med) 

are applied to the calculation of projected future benefits. These factors are also 

used to adjust the historical payments to current year constant dollars. The 

liability is determined assuming an annual payment at mid-year. 

The compensation COLA and the CPI-Med used in the model's calculation of 

estimates were as follows: 

FY COLA CPI-Med

 

2011 2.23% 3.45%

2012 1.13% 3.43%

2013 1.70% 3.64%

2014 1.90% 3.66%

2015 1.93% 3.73%

The medical inflation rates presented represent an average of published 

quarterly rates covering the benefit payment fiscal year. The compensation 

factors presented are the blended rates used by the model rather than the 

published July 23, 2010, FECA-COLA factor from which the blended rates are 

derived. 

3. Net Intra-Governmental Accounts Receivable

Net intra-governmental accounts receivable balance of $5,133,835 thousand 

represents the total of the amounts billed to Federal agencies through June 30, 

2010, that had not been paid as of September 30, 2010, of $4,300,876 thousand, 

including prior year’s amounts billed, if applicable; plus an accrued 

 

(continued) 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

 Report Number: 22-11-001-04-431 

16 

SECTION 1C 

Notes to the Schedule of Actuarial Liability and Net Intra-Governmental 

Accounts Receivable as of September 30, 2010, and Benefit Expense

For the Year Ended September 30, 2010 

receivable for benefit payments not yet billed for the period July 1, 2010, through 

September 30, 2010, of $857,461 thousand, less applicable credits due from the 

Public of $24,502 thousand. The FECA Special Benefit Fund also receives an 

appropriation for special cases and older cases where employing agencies are 

not charged for benefit payments. 

Each Federal agency is required by the Federal Employees’ Compensation Act 

to include in their annual budget estimate a request for an appropriation in the 

amount equal to the agency cost. Agencies not receiving an appropriation are 

required to pay agency costs from funds directly under their control. In addition, 

certain corporations and instrumentalities are assessed under the Federal 

Employees' Compensation Act for a fair share of the costs of administering 

disability claims filed by their employees. The fair share costs are included in the 

calculation to determine the net intra-governmental accounts receivable. 

4. Benefit Expense

Benefit expense for the year ended September 30, 2010, was comprised of the 

following (dollars in thousands): 

Benefits paid for compensation $ 1,930,115 

Benefits paid for medical benefits 926,701 

Change in accrued benefits (48,237)

Change in actuarial liability 2,866,228

 

 Total benefit expense $ 5,674,807
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431

17

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036-3389 

SECTION 2A 

Independent Accountants’ Report 

on Applying Agreed-Upon Procedures

 

Shelby Hallmark, Director 

Office of Workers’ Compensation Programs, U.S. Department of Labor 

Government Accountability Office, Office of Management and Budget, 

and Agencies Specified in Section 2B of this Report: 

We have performed the procedures described in Section 2C, Agreed-Upon Procedures 

and Results, which were agreed to by the U.S. Department of Labor, U.S. Government 

Accountability Office, Office of Management and Budget, and the Agencies specified in 

Section 2B of this Report, solely to assist you and such agencies with respect to the 

accompanying Schedules of Actuarial Liability by Agency and Net Intra-Governmental 

Accounts Receivable by Agency as of September 30, 2010, and Benefit Expense by 

Agency for the year ended September 30, 2010, of the U.S. Department of Labor 

Federal Employees’ Compensation Act Special Benefit Fund (the Schedules). The U.S. 

Department of Labor is responsible for the Schedules (Section 2B). 

This agreed-upon procedures engagement was conducted in accordance with 

attestation standards established by the American Institute of Certified Public 

Accountants and with Government Auditing Standards, issued by the Comptroller 

General of the United States. 

The sufficiency of these procedures is solely the responsibility of the parties specified in 

this report. Consequently, we make no representation regarding the sufficiency of the 

procedures described in Section 2C either for the purpose for which this report has 

been requested or for any other purpose. Our agreed-upon procedures and results are 

presented in Section 2C of this report. 

We were not engaged to, and did not conduct an examination of the Schedules of 

Actuarial Liability by Agency, Net Intra-Governmental Accounts Receivable by Agency, 

and Benefit Expense by Agency, the objective of which would be the expression of an 

opinion on the Schedules or a part thereof. Accordingly, we do not express such an 

opinion. Had we performed additional procedures, other matters might have come to 

our attention that would have been reported to you. 

KPMG LLP is a Delaware limited liability partnership, 

the U.S. member firm of KPMG International Cooperative 

(“KPMG International”), a Swiss entity. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431

18 

This report is intended solely for the information and use of the U.S. Department of 

Labor, the U.S. Government Accountability Office, Office of Management and Budget, 

and those Federal agencies with responsibility for the FECA program, and is not 

intended to be and should not be used by anyone other than these specified parties. 

October 29, 2010 
Special Report Relating to the 

 Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431

19

SECTION 2B 

U.S. Department of Labor 

Office of Workers’ Compensation Programs 

Federal Employees’ Compensation Act Special Benefit Fund 

Schedule of Actuarial Liability by Agency

 As of September 30, 2010 

(dollars in thousands)

AGENCY

Actuarial 

Liability

Agency for International Development $ 26,035 

Environmental Protection Agency 44,938 

General Services Administration 135,331 

National Aeronautics and Space Administration 55,402 

National Science Foundation 1,356 

Nuclear Regulatory Commission 7,575 

Office of Personnel Management 22,044 

U.S. Postal Service 10,597,448 

Small Business Administration 29,960 

Social Security Administration 319,296 

Tennessee Valley Authority 499,357 

U. S. Department of Agriculture 881,454 

U. S. Department of the Air Force 1,321,451 

U. S. Department of the Army 1,813,932 

U. S. Department of Commerce 210,235 

U. S. Department of Defense – other 820,707 

U. S. Department of Education 17,603 

U. S. Department of Energy 93,317 

U. S. Department of Health and Human Services 259,500 

U. S. Department of Homeland Security 1,937,836 

U. S. Department of Housing and Urban Development 72,289 

 (continued)
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

20 

SECTION 2B 

U.S. Department of Labor 

Office of Workers’ Compensation Programs 

Federal Employees’ Compensation Act Special Benefit Fund 

Schedule of Actuarial Liability by Agency

 As of September 30, 2010 

(dollars in thousands) 

AGENCY

Actuarial 

Liability

U. S. Department of the Interior $ 723,132 

U. S. Department of Justice 1,314,109 

U. S. Department of Labor 226,494 

U. S. Department of the Navy 2,463,087 

U. S. Department of State 71,997 

U. S. Department of Transportation 976,754 

U. S. Department of the Treasury 544,345 

U. S. Department of Veterans Affairs 1,862,265 

Other agencies1 2,470,683 

Total - all agencies $ 29,819,932 

1 Non-billable and other agencies for which OWCP has not individually calculated an actuarial liability.
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

21

SECTION 2B 

U.S. Department of Labor 

Office of Workers’ Compensation Programs 

Federal Employees’ Compensation Act Special Benefit Fund 

Schedule of Net Intra-Governmental 

Accounts Receivable by Agency

As of September 30, 2010 

(dollars in thousands) 

AGENCY

Amounts 

Billed Not 

Yet Paid (1)

Amounts 

Expended 

Not Yet 

Billed (2) 

Credits 

Due from 

Public (3) 

Net IntraGovernmental 

Accounts 

Receivable (4)

Agency for International Development $ 6,805 $ 1,057 $ (30) $ 7,832 

Environmental Protection Agency 8,630 1,648 (47) 10,231 

General Services Administration 27,844 4,354 (124) 32,074 

National Aeronautics and Space 

Administration 11,894 1,771 (51) 13,614 

National Science Foundation 282 60 (2) 340 

Nuclear Regulatory Commission 1,477 249 (7) 1,719 

Office of Personnel Management 4,014 833 (24) 4,823 

United States Postal Service 1,161,120 357,552 (10,217) 1,508,455 

Small Business Administration 5,095 793 (23) 5,865 

Social Security Administration 51,372 8,139 (233) 59,278 

Tennessee Valley Authority 61,841 16,011 (458) 77,394 

U. S. Department of Agriculture 146,510 22,229 (635) 168,104 

U. S. Department of the Air Force 260,490 40,396 (1,154) 299,732 

U. S. Department of the Army 279,135 42,606 (1,217) 320,524 

U. S. Department of Commerce 34,622 8,396 (240) 42,778 

U. S. Department of Defense – other 206,069 31,187 (891) 236,365 

U. S. Department of Education 3,036 524 (15) 3,545 

U. S. Department of Energy 15,870 2,864 (82) 18,652 

 (continued)

1 Amount billed through June 30, 2010 (including prior years) but not yet paid as of September 30, 2010. 

2 Amounts paid and accrued but not yet billed for the period July 1, 2010 through September 30, 2010. 

3 Allocation of credits due from the public through September 30, 2010. 

4 Total amount due to the fund for each agency as of September 30, 2010. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

22

SECTION 2B 

U.S. Department of Labor 

Office of Workers’ Compensation Programs 

Federal Employees’ Compensation Act Special Benefit Fund 

Schedule of Net Intra-Governmental 

Accounts Receivable by Agency

As of September 30, 2010 

(dollars in thousands) 

AGENCY 

Amounts 

Billed Not 

Yet Paid (1) 

Amounts 

Expended 

Not Yet 

Billed (2) 

Credits 

Due from 

Public (3) 

Net IntraGovernmental 

Accounts 

Receivable (4) 

U. S. Department of Health and Human 

Services $ 51,724 $ 7,869 $ (225) $ 59,368 

U. S. Department of Homeland Security 324,882 49,613 (1,418) 373,077 

U. S. Department of Housing and Urban 

Development 15,144 2,497 (71) 17,570 

U. S. Department of the Interior 118,053 18,311 (523) 135,841 

U. S. Department of Justice 211,622 32,761 (936) 243,447 

U. S. Department of Labor 45,891 8,077 (231) 53,737 

U. S. Department of the Navy 474,046 73,730 (2,107) 545,669 

U. S. Department of State 15,433 2,669 (76) 18,026 

U. S. Department of Transportation 196,939 31,391 (897) 227,433 

U. S. Department of the Treasury 106,247 16,901 (483) 122,665 

U. S. Department of Veterans Affairs 360,366 55,867 (1,596) 414,637 

Other agencies 94,423 17,106 (489) 111,040 

Total - all agencies $ 4,300,876 $ 857,461 $ (24,502) $ 5,133,835 

1 Amount billed through June 30, 2010 (including prior years) but not yet paid as of September 30, 2010. 

2 Amounts paid and accrued but not yet billed for the period July 1, 2010 through September 30, 2010. 

3 Allocation of credits due from public through September 30, 2010. 

4 Total amount due to the fund for each agency as of September 30, 2010. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

23

SECTION 2B 

U.S. Department of Labor 

Office of Workers’ Compensation Programs 

Federal Employees’ Compensation Act Special Benefit Fund 

Schedule of Benefit Expense by Agency

As of September 30, 2010 

(dollars in thousands) 

AGENCY

Benefits Paid 

and Change 

in Accrued 

Benefits 

Change in 

Actuarial 

Liability

Total 

Benefit 

Expense

Agency for International Development $ 3,328 $ (850) $ 2,478 

Environmental Protection Agency 4,534 816 5,350 

General Services Administration 13,465 (622) 12,843 

National Aeronautics and Space Administration 5,452 (1,510) 3,942 

National Science Foundation 159 37 196 

Nuclear Regulatory Commission 733 (53) 680 

Office of Personnel Management 2,148 348 2,496 

United States Postal Service 1,130,060 1,090,197 2,220,257 

Small Business Administration 2,441 320 2,761 

Social Security Administration 25,506 8,659 34,165 

Tennessee Valley Authority 51,023 (6,134) 44,889 

U. S. Department of Agriculture 71,767 35,458 107,225 

U. S. Department of the Air Force 128,239 34,516 162,755 

U. S. Department of the Army 175,885 23,662 199,547 

U. S. Department of Commerce 22,069 39,048 61,117 

U. S. Department of Defense – other 62,966 4,853 67,819 

U. S. Department of Education 1,553 1,404 2,957 

U. S. Department of Energy 9,152 (2,580) 6,572 

U. S. Department of Health and Human Services 24,658 6,188 30,846 

U.S. Department of Homeland Security 161,464 111,616 273,080 

(continued)
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

24

SECTION 2B 

U.S. Department of Labor 

Office of Workers’ Compensation Programs 

Federal Employees’ Compensation Act Special Benefit Fund 

Schedule of Benefit Expense by Agency

As of September 30, 2010 

(dollars in thousands) 

AGENCY

Benefits Paid 

and Change 

in Accrued 

Benefits

Change in 

Actuarial 

Liability 

Total 

Benefit 

Expense

U. S. Department of Housing and Urban Development $ 7,842 $ 3,231 $ 11,073 

U. S. Department of the Interior 58,438 25,921 84,359 

U. S. Department of Justice 105,406 80,208 185,614 

U. S. Department of Labor 20,213 9,698 29,911 

U. S. Department of the Navy 232,556 37,500 270,056 

U. S. Department of State 7,297 376 7,673 

U. S. Department of Transportation 96,417 6,015 102,432 

U. S. Department of the Treasury 52,972 18,915 71,887 

U. S. Department of Veterans Affairs 181,613 127,336 308,949 

Other agencies (1) 149,223 1,211,655 1,360,878 

Total - all agencies $ 2,808,579 $ 2,866,228 $ 5,674,807 

1 Non-billable and other agencies for which OWCP has not individually calculated an actuarial liability. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

ACTUARIAL LIABILITY 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

25

Agreed-Upon Procedures Performed Results of Procedures 

1) Calculated the actuarial liability as of 

September 30, 2010, using KPMG’s 

loss development actuarial model1

. 

The actuarial liability as of September 30, 

2010, calculated using KPMG’s loss 

development actuarial model is 

approximately $29.5 billion. 

2) Recalculated the actuarial liability as 

of September 30, 2010, using DOL’s 

loss development actuarial model2. 

No exceptions were found as a result of 

applying this procedure. 

3) Compared DOL’s actuarial liability as 

of September 30, 2010, using DOL’s 

loss development actuarial model to 

KPMG’s calculation of the actuarial 

liability as of September 30, 2010, 

using KPMG’s loss development 

actuarial model. 

DOL’s actuarial liability as of September 

30, 2010, using DOL’s loss development 

actuarial model is approximately $332 

million (1.1%) greater than KPMG’s 

calculation of the actuarial liability as of 

September 30, 2010, using KPMG’s loss 

development actuarial model. 

 

1

 KPMG’s model uses actual data to evaluate trends and project future payments. KPMG’s model also supplements 

its methodology with the number of workers related to each agency in injury years 2005 through 2010. 2

 The DOL model uses a Paid Loss Development Method by agency, by defined agency groups, and in total using 

inflation rate assumptions on both past and future indemnity and medical benefits to adjust past data and project 

forward. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

ACTUARIAL LIABILITY 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

26 

4) Compared DOL’s actuarial liability as 

of September 30, 2010, using DOL’s 

loss development actuarial model to 

KPMG’s calculation of the actuarial 

liability as of September 30, 2010, 

using DOL’s loss development 

actuarial model. For any identified 

differences, confirmed that DOL 

corrected the difference in DOL’s final 

loss development actuarial model by 

agreeing (a) KPMG’s calculation of 

the actuarial liability as of September 

30, 2010, using DOL’s final loss 

development actuarial model to (b) the 

actuarial liability reported in the 

special report. 

No exceptions were found as a result of 

applying this procedure. 

5) Compared the interest rate and 

inflation (COLA, CPI-Med) 

assumptions used by the DOL loss 

development actuarial model as of 

September 30, 2010, to the interest 

rate and inflation (COLA, CPI-Med) 

assumptions used by KPMG’s loss 

development model as of September 

30, 2010. 

No exception was noted in our comparison 

of the interest rate assumption. KPMG’s 

model does not use an explicit inflation 

rate assumption because it does not adjust 

data to the current level and therefore 

inflation was implicitly included in the loss 

development patterns selected. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

ACTUARIAL LIABILITY 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

27

6) Compared the average interest rate 

and average inflation rate (COLA and 

CPI-Med) assumptions used by the 

DOL loss development actuarial 

model as of September 30, 2009, to 

the average interest rate and average 

inflation rate (COLA and CPI-Med) 

assumptions used by the DOL loss 

development actuarial model as of 

September 30, 2010. 

The average interest rate used by the DOL 

loss development actuarial model 

decreased from 4.70% to 4.28% from 

September 30, 2009 to September 30, 

2010. 

The average COLA rate used by the DOL 

loss development actuarial model 

decreased from 1.92% to 1.91% from 

September 30, 2009 to September 30, 

2010. 

The average CPI-med rate used by the 

DOL loss development actuarial model 

increased from 3.68% to 3.71% from 

September 30, 2009 to September 30, 

2010. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

ACTUARIAL LIABILITY 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

28

7) Calculated the percentage change in 

the actuarial liability by agency and in 

the aggregate from September 30, 

2009, to September 30, 2010, based 

on the DOL loss development 

actuarial model, identified agencies 

whose actuarial liability changed by 

more than 10 percent during fiscal 

year 2010, and for such agencies, 

calculated the percentage change in 

benefit payments for the year ended 

September 30, 2009, to September 

30, 2010. 

The actuarial liability increased in the 

aggregate from approximately $27.0 billion 

as of September 30, 2009, to 

approximately $29.8 billion (10.63%) as of 

September 30, 2010. 

The following agencies had a change in 

actuarial liability from September 30, 2009, 

to September 30, 2010, of greater than 

10%: 

Agency

Percentage 

change in 

actuarial 

liability 

Percentage 

change in 

benefit 

payments 

COM 22.81% 27.05% 

USPS 11.47% 8.38% 

8) Compared the interest rate (used for 

discounting the future liability to the 

present value) and inflation rates 

(COLA and CPI-Med) used by the 

DOL loss development actuarial 

model as of September 30, 2010, to 

the interest rate (used for discounting 

the future liability to the present value) 

and inflation rates (COLA and CPIMed) published by OMB in the Fiscal 

Year 2011 Mid-Session Review. 

No exceptions were found as a result of 

applying this procedure. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

ACTUARIAL LIABILITY 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

29

9) Compared the actuarial liability, by 

agency, as of September 30, 2010, as 

reported in the Memorandum to the 

CFOs of Executive Departments

issued by DOL’s Chief Financial 

Officer, to the liability calculated by 

the DOL loss development model as 

of September 30, 2010. 

No exceptions were found as a result of 

applying this procedure. 

10) Compared both the benefit payments 

by agency for the chargeback year 

ended June 30, 2010, and the 

aggregate benefit payments for the 

chargeback years ended June 30, 

2005-2010 used by the DOL loss 

development actuarial model, with the 

benefit payments by agency for the 

chargeback year ended June 30, 

2010, and the aggregate benefit 

payments for the chargeback years 

ended June 30, 2005-2010, as 

reported in the Summary Chargeback 

Billing Report. 

No exceptions were found as a result of 

applying this procedure. 

11) Compared the agency groupings used 

in the DOL loss development actuarial 

model as of September 30, 2010, with 

the agency groupings used in the 

DOL loss development actuarial 

model as of September 30, 2009. 

. 

No exceptions were found as a result of 

applying this procedure. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

ACTUARIAL LIABILITY 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

30 

Agreed-Upon Procedures Performed Results of Procedures

12) Compared the fiscal year 2010 benefit 

payments calculated by the 2009 DOL 

loss development actuarial model to 

the actual fiscal year 2010 benefit 

payments from the DOL Summary 

Chargeback Billing Report and 

identified agencies where the DOL 

loss development actuarial model 

calculated benefit payments varied by 

more than 20% and $2 million from 

the actual benefit payments made 

during fiscal year 2010 from the DOL 

Summary Chargeback Billing Report. 

The benefit payments calculated by the 

2009 DOL loss development actuarial 

model varied by more than 20% and $2 

million from the agency’s actual fiscal year 

2010 benefit payments from the DOL 

Summary Chargeback Billing Report for 

the following agency. 

Agency Percent 

variance 

Dollar 

Variance 

COM 24.33% $3,869,456 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund

SECTION 2C 

Agreed-Upon Procedures & Results 

ACTUARIAL LIABILITY 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

31

13) Compared the net effective rates 

(interest minus inflation rates) for 

compensation and medical used in the 

USPS, OPM, SSA, Energy 

Employees’ Occupation Illness 

Compensation Program, and the 

Black Lung Disability Trust Fund loss 

development actuarial models as of 

September 30, 2010, to the net 

effective rates for compensation and 

medical used by the DOL loss 

development actuarial model as of 

September 30, 2010. 

The net effective rate (interest minus 

inflation rate1) for compensation of 2.37% 

used in the DOL loss development 

actuarial model as of September 30, 2010, 

is greater than the net effective rate used 

for compensation in the USPS, OPM, 

Energy Employees’ Occupation Illness 

Compensation Program, and the Black 

Lung Disability Trust Fund loss 

development actuarial models, and is less 

than the net effective rate used for 

compensation in the SSA loss 

development model, as of September 30, 

2010, as follows: 

- Postal Service 0.2% 

- OPM 2.0% 

- Energy Employees’ Occupation 

Illness Compensation Program (no 

compensation rates included in 

models) 

- Black Lung Disability Trust Fund 

1.51% 

- SSA (2.95%) 

The net effective rate (interest rate minus 

inflation rate2

) for medical of 0.57% used in 

the DOL loss development actuarial model 

as of September 30, 2010, is greater than 

the net effective rate for medical used in 

the Energy Employees’ Occupation Illness 

Compensation Program (-1.70%) and 

Postal Service (-4.43%) loss development 

actuarial models as of September 30, 

2010. 

 

1

COLA 

2

CPI-Med 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

ACTUARIAL LIABILITY 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

32 

Agreed-Upon Procedures Performed Results of Procedures 

The net effective rate (interest rate minus 

inflation rate2) for medical of 0.57% used in 

the DOL loss development actuarial model as 

of September 30, 2010, is less than the net 

effective rate for medical used in the and the 

Black Lung Disability Trust Fund (1.77%) loss 

development actuarial models as of 

September 30, 2010. 

We did not complete this procedure for net 

effective rates for medical used by OPM and 

SSA because the rates were not provided. 

 

2

CPI-Med 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund

SECTION 2C 

Agreed-Upon Procedures & Results 

NET INTRA-GOVERNMENTAL ACCOUNTS RECEIVABLE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

33

Agreed-Upon Procedures Performed Results of Procedures 

14) Confirmed gross accounts receivable 

balances due as of June 30, 2010, 

from the Liability for Current Federal 

Employees’ Compensation Act Benefits

prepared by the DOL-OCFO and 

posted on the DOL website3

 for all CFO 

Act agencies (except DOL) and the 

U.S. Postal Service and compared 

confirmed gross accounts receivable 

balances as of June 30, 2010, to the 

amounts posted on the DOL website. 

Confirmations were received from all 

agencies that were sent a confirmation 

request. The confirmed gross accounts 

receivable balances as of June 30, 2010, 

agreed with the gross accounts receivable 

balances as of June 30, 2010, posted on 

the DOL website. 

15)Compared the net intra-governmental 

accounts receivable balances by 

Federal agency as reported by the 

OCFO on the Liability for Current 

Federal Employees’ Compensation Act 

Benefits report as of September 30, 

2009, to the net intra-governmental 

accounts receivable balances by 

Federal agency as reported by the 

OCFO on the Liability for Current 

Federal Employees’ Compensation Act 

Benefits report as of September 30, 

2010. 

The variances between the net intragovernmental accounts receivable 

balances by Federal agency as reported 

by the OCFO on the Liability for Current 

Federal Employees’ Compensation Act 

Benefits report as of September 30, 2009 

and the net intra-governmental accounts 

receivable balances by Federal agency as 

reported by the OCFO on the Liability for 

Current Federal Employees’ 

Compensation Act Benefits as of 

September 30, 2010, are identified in 

Exhibit A. 

 

3

 http://www.dol.gov/ocfo/media/reports/FECA_liability_2010_4q.pdf 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

NET INTRA-GOVERNMENTAL ACCOUNTS RECEIVABLE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

34 

16)Recalculated the September 30, 2010, 

net intra-governmental accounts 

receivable balances for each agency 

by adding the fiscal year 2010 bills sent 

to Federal agencies to the prior-year 

ending balance from the prior-year’s 

special report, less the current year 

cash collections as reported by the 

OCFO on the SF-224’s, plus the 

change in the 4th quarter unbilled 

accounts receivable from fiscal year 

2009 to fiscal year 2010 reported in the 

detailed general ledger, and less the 

2010 change in net other credits due 

from the public reported in the detailed 

general ledger. 

No exceptions were found as a result of 

applying this procedure. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

NET INTRA-GOVERNMENTAL ACCOUNTS RECEIVABLE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

35

Agreed-Upon Procedures Performed Results of Procedures 

17) Compared the recalculated September 

30, 2010, net intra-governmental 

accounts receivable balances for each 

agency to the balance reported by the 

OCFO in the Liability for Current 

Federal Employees’ Compensation Act 

Benefits report as of September 30, 

2010, and identified differences above 

1%. 

The recalculated September 30, 2010, net 

intra-governmental accounts receivable 

balance varied greater than 1% of the 

balance reported by the OCFO in the 

Liability for Current Federal Employees’ 

Compensation Act Benefits report as of 

September 30, 2010 for the following 

agency: 

Agency Amount (%) 

COM ($2,134,790) (4.75%) 

18) Compared the Summary Chargeback 

Billing Report for the period July 1, 

2009, through June 30, 2010, to the 

bills sent to Federal entities dated July 

31, 2010. 

No exceptions were found as a result of 

applying this procedure. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

NET INTRA-GOVERNMENTAL ACCOUNTS RECEIVABLE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

36 

19) Compared the Allocation of Accrued 

Benefits as of September 30, 2010, 

recorded on the OCFO Liability for 

Current Federal Employees’ 

Compensation Act Benefits report as of 

September 30, 2010, to the accrual 

calculation worksheet prepared by 

DOL. 

No exceptions were found as a result of 

applying this procedure. 

20) Compared the fiscal year 2010 4th

quarter accounts receivable prepared 

by the OCFO and reported on the 4th

quarter Liability for Current Federal 

Employees’ Compensation Act 

Benefits report to the fiscal year 2010 

4th quarter benefit payments reported 

on the Summary Chargeback Billing 

Report. 

The FY 2010 4th quarter accounts 

receivable prepared by the OCFO was 

less than the actual payments reported on 

the Summary Chargeback Billing Report 

by approximately $42 thousand. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

EXHIBIT A 

Results of Procedure 15 

SECTION 2C 

Agreed-Upon Procedures & Results 

NET INTRA-GOVERNMENTAL ACCOUNTS RECEIVABLE 

Procedures and Results 

(dollars in thousands) 

Net Intra-Governmental 

Accounts Receivable as reported by the OCFO on the 

Liability for Current Federal Employees’ Compensation Act Benefits as of 

September 30, 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

37

Agency 2010 2009 Variance 

Agency for International Development $ 7,832 $ 7,729 $ 103 

Environmental Protection Agency 10,232 10,068 164 

General Services Administration 32,074 33,431 (1,357)

National Aeronautics and Space Administration 13,615 14,914 (1,299)

National Science Foundation 340 309 31 

Nuclear Regulatory Commission 1,719 1,725 (6)

Office of Personnel Management 4,823 4,875 (52)

U.S. Postal Service 1,508,455 1,427,318 81,137 

Small Business Administration 5,865 5,842 23 

Social Security Administration 59,278 59,754 (476)

Tennessee Valley Authority 77,395 81,811 (4,416)

U.S. Department of Agriculture 168,104 169,245 (1,141)

U.S. Department of the Air Force 299,731 302,724 (2,993)

U.S. Department of the Army 320,523 323,914 (3,391)

U.S. Department of Commerce 44,913 36,252 8,661 

U.S. Department of Defense - other 236,555 211,414 25,141 

U.S. Department of Education 3,545 3,436 109 

U.S. Department of Energy 18,652 19,335 (683)

U.S. Department of Health and Human Services 59,368 60,182 (814)

U.S. Department of Homeland Security 373,077 372,640 437 

(continued) 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

EXHIBIT A 

Results of Procedure 15 

SECTION 2C 

Agreed-Upon Procedures & Results 

NET INTRA-GOVERNMENTAL ACCOUNTS RECEIVABLE 

Procedures and Results 

(dollars in thousands) 

Net Intra-Governmental 

Accounts Receivable as reported by the OCFO on the 

Liability for Current Federal Employees’ Compensation Act Benefits as of 

September 30, 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

38 

Agency 2010 2009 Change 

U.S. Department of Housing and Urban 

Development $ 17,570 $ 17,503 $ 67

U.S. Department of Interior 135,842 137,677 (1,835)

U.S. Department of Justice 243,447 236,259 7,188 

U.S. Department of Labor 53,736 53,368 368 

U.S. Department of Navy 545,670 555,871 (10,201)

U.S. Department of State 18,025 18,271 (246)

U.S. Department of Transportation 227,434 229,167 (1,733)

U.S. Department of the Treasury 122,563 123,099 (536)

U.S. Department of Veterans Affairs 414,637 408,911 5,726 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

39

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Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

BENEFIT EXPENSE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

40 

Agreed-Upon Procedures Performed Results of Procedures

 

21) Compared the fiscal year 2010 

benefit payments recorded in the 

Integrated Federal Employees 

Compensation System (iFECS) and 

Central Bill Pay (CBP) databases as of 

March 31, 2010, and September 30, 

2010, to the fiscal year 2010 benefit 

payments reported in the U.S. 

Department of Treasury’s SF-224 as 

of March 31, 2010, and September 30, 

2010. 

No exceptions were found as a result of 

applying this procedure. 

22) Performed the following procedures 

over the reconciliation prepared by the 

Office of Workers’ Compensation 

Programs between the benefit 

payments reported in the Chargeback 

Billings Reports for the fiscal year 

ended September 30, 2010, and the 

benefit payments reported in the 

iFECS and CBP databases for the 

fiscal year ended September 30, 2010:

A) Compared the benefit expenses in 

the Chargeback Billings Reports

reported in the reconciliation to the 

actual Chargeback Billings Reports. 

B) Compared the Benefit payments 

from iFECS and the CBP databases 

reported in the reconciliation to the 

actual iFECS and the CBP 

databases. 

C) Identified differences above 1%. 

No exceptions were found as a result of 

applying this procedure 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

BENEFIT EXPENSE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

41

23) Compared compensation and medical 

bill payments by agency for the fiscal 

year ended September 30, 2010, from 

the Summary Chargeback Billing 

Report prepared by DOL, to the 

compensation and medical bill 

payments by agency made for the 

fiscal year ended September 30, 2009, 

from the Summary Chargeback Billing 

Report prepared by DOL, and 

identified any variances above 10%. 

The following agencies had increases over 

10% in compensation and medical bill 

payments for the year ended September 

30, 2010, compared to the year ended 

September 30,2009: 

Agency Variance

NSF 18.24% 

EDU 12.32% 

COM 27.05% 

Variances for the remaining agencies were 

10% or less. 

24) For a selection of 143 compensation 

payments for initially eligible 

claimants, compared beneficiary 

name, beneficiary social security 

number, date of birth, benefit amount, 

payment date, and other unique 

identifiers from the applicable Forms 

CA-1 Federal Notice of Traumatic 

Injury and Claim for Continuation of 

Pay/Compensation, and CA-2 Notice 

of Occupational Disease and Claim 

for Compensation to the beneficiary 

name, beneficiary social security 

number, date of birth, benefit amount, 

payment date, and other unique 

identifiers in iFECS database. 

No exceptions were found as a result of 

applying this procedure. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

BENEFIT EXPENSE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

42 

25) For a selection of 145 compensation 

payments for continuing eligibility and 

file maintenance, compared 

beneficiary name, beneficiary social 

security, date of birth, benefit amount, 

payment date, and other unique 

identifiers from applicable Forms CA7 Claim for Compensation, and CA1032 Request for information on 

Earnings, Dual Benefits, Dependents 

and Third Party Settlements to the 

beneficiary name, beneficiary social 

security number, date of birth, benefit 

amount, payment date, and other 

unique identifiers in iFECS database. 

. 

No exceptions were found as a result of 

applying this procedure. 

26) For a selection of 57 medical 

payments, compared the vendor 

name, date, and other unique 

identifiers from the medical bill and 

payment amount on the summary 

sheet of the Achieve system to the 

vendor name, payment amount, date, 

and other unique identifiers in CBP 

database. 

No exceptions were found as a result of 

this procedure. 

27) Calculated the change in the actuarial 

liability from September 30, 2009, to 

September 30, 2010, as calculated by 

the DOL loss development actuarial 

model. 

The actuarial liability increased by 

approximately $2,866 million on the 

compilation reports prepared by DOL from 

September 30, 2009, to September 30, 

2010. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

BENEFIT EXPENSE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

43

28) Calculated the fiscal year 2010 

projected benefit payments using the 

following two step process: 

(a) Calculated the average benefit 

payment amount per roll during the 

period of October 1, 2009 to March 

31, 2010, by dividing the total medical 

and compensation benefit payments 

from the iFECS and CBP databases 

by the number of rolls in the period 

from October 1, 2009 to March 31, 

2010 from the iFECS and CBP 

databases; and 

(b) Multiplied the average benefit 

payment amount per roll determined 

in step 28 (a) above by the number of 

rolls scheduled for fiscal year 2010 in 

accordance with the FECA. 

Compared this amount to the actual 

12-month total benefit payments as of 

September 30, 2010, calculated from 

the Summary Chargeback Billing 

Reports. 

The calculated annual projected benefit 

payments based on the March 31, 2010 

iFECS and CBP databases were 

approximately $61.7 million (2.23%) more 

than the actual 12 month total benefit 

payments as of September 30, 2010, 

calculated from the Summary Chargeback 

Billing Reports. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

SECTION 2C 

Agreed-Upon Procedures & Results 

BENEFIT EXPENSE 

Procedures and Results 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

44 

29) Compared the fiscal year 2010 4th

quarter benefit expense estimate 

calculated by the OCFO as reported 

on the Liability for Current Federal 

Employees Compensation Act 

Benefits report to the actual fiscal 

year 2010 4th quarter benefit expense 

recorded in iFECS and CBP 

databases. 

The FY 2010 4th quarter benefit expense 

estimate calculated by the OCFO was less 

than the actual payments reported on the 

Summary of Chargeback Billing Report by 

approximately $42 thousand. 
Special Report Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG LLP, for the 

U.S. Department of Labor—Office of Inspector General 

Report Number: 22-11-001-04-431 

45

Appendix 
Special Reports Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG, for the 

U.S. Department of Labor—Office of Inspector General 

Report No: 22-11-001-04-431

46 

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Special Reports Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG, for the 

U.S. Department of Labor—Office of Inspector General 

Report No: 22-11-001-04-431

47

ACRONYMS and ABBREVIATIONS 

 ACS Affiliated Computer Services 

 AODF All Other Defense 

AUP Agreed Upon Procedures 

BLS Bureau of Labor Statistics 

CBP Central Bill Processing System 

CFO Chief Financial Officers’ Act 

COLA Cost of Living Allowance 

 COM U.S. Department of Commerce 

CPI-Med Consumer Price Index for Medical 

DHS U.S. Department of Homeland Security 

DOD U.S. Department of Defense 

DOI U.S. Department of Interior 

DOJ U.S. Department of Justice 

DOL U.S. Department of Labor 

DOS U.S. Department of State 

DOT U.S. Department of Transportation 

EDU U.S. Department of Education 

EPA Environmental Protection Agency 

ESA Employment Standards Administration 

FECA Federal Employees' Compensation Act 

HUD Department of Housing and Urban Development 

iFECS Integrated Federal Employees’ Compensation 

System 

LBP Liability to Benefits Paid 

NASA National Aeronautics and Space Administration 

NCS Corp. for National and Community Service 

NRC Nuclear Regulatory Commission 

NSF National Science Foundation 

OCFO Office of the Chief Financial Officer 

OMB Office of Management and Budget 

OPC Office of Peace Corps 

OPM Office of Personnel Management 

OWCP Office of Workers' Compensation Programs 

SBA Small Business Administration 

 (continued) 
Special Reports Relating to the 

Federal Employees’ Compensation Act Special Benefit Fund 

Prepared by KPMG, for the 

U.S. Department of Labor—Office of Inspector General 

Report No: 22-11-001-04-431

48 

ACRONYMS and ABBREVIATIONS 

SFFAS Statement of Federal Financial Accounting 

Standards 

SMI Smithsonian Institution 

SSA Social Security Administration 

USAID U.S. Agency for International Development 

USDA Department of Agriculture 

USPS U.S. Postal Service 

TREAS U.S. Department of the Treasury 

TVA Tennessee Valley Authority